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Peak power demand or highest power requirement during a day fell on an average by 25 per cent last week.
According to data compiled by the Power System Operation Corporation Ltd (Posoco), the average peak power requirement from April 5, 2020 to April 12, 2020 stood at 1,22,297 MW, down from 1,63,478 MW in the same period of 2019.
The drastic fall in demand is due to the Covid-19 lockdown that has shut down non-essential manufacturing and service industries. Heavy power consumers such as the steel sector are operating at minimal output as product inventory builds.
According to steel company officials, the industrial units are continuing production during the 21-day lockdown period. But there is hardly any offtake as construction activities are at a standstill. Plant capacity utilisation is much lower than usual, and the production taking place now is just building up the inventory.
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Power generator companies, which have been saddled with unpaid dues, now have to additionally grapple with a sharp fall in demandLower demand would spell trouble for power distribution companies that will see a fall in bill collections.
This also translates to more stranding of power generation units that would require to produce even lesser power.
Dampened margins
A demand slump also dampens margins for producers on the electricity exchange.
According to IEX, the average market clearing price in Day Ahead Market during March 2020 was around ₹2.46 per unit, down 21 per cent this month against ₹3.12 per unit in March 2019. The company estimated that rates may continue to be on the lower side as the Covid-19 situation unfolds.
To support Discoms, the Power Ministry relaxed the payment security mechanism. This has been done to support Discoms that are finding it difficult to collect payments for bills raised on consumers during the lockdown.
The Coal Ministry also lowered the levies on the fuel to support both power and non-power consumers.
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